Auditors frequently refer to the terms principles and procedures. Required: Auditors use different types of audit...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Auditors frequently refer to the terms principles and procedures. Required: Auditors use different types of audit procedures to gather the evidence necessary to conclude that the risk of material misstatement for each relevant assertion has been reduced to an acceptably low level. Identify the type of procedure used by auditors for each of the following examples. Find brokers' invoices and canceled checks showing agreement (1) with record amounts for securities investments. (2) Observe test counting of client's physical inventory taking. Select a sample of shipping documents and trace them to sales invoices, sales journal recording, and posting to general ledger. (4) Ask client personnel about accounting events. (5) Study financial information in relation to nonfinancial information. (6) Scan expense accounts for credit entries. (7) Compare financial information with that of prior periods. (8) Obtain written client representation letter. (9) Scan payroll check lists for unusually large checks. |(10) Complete an internal control questionnaire. (11) Obtain client's lawyer's letter. (3) Study predictable financial information patterns (e.g., ratio (12) analysis). (13) Analyze valuation of receivables by re-aging them by due date. (14) Obtain accounts receivable confirmations. (15) Compare financial information with budgets and forecasts. (16) Verify existence of fixed assets by locating them. (17) Compare financial information to industry statistics. (18) Recompute the client's calculation of depreciation expense. Auditors frequently refer to the terms principles and procedures. Required: Auditors use different types of audit procedures to gather the evidence necessary to conclude that the risk of material misstatement for each relevant assertion has been reduced to an acceptably low level. Identify the type of procedure used by auditors for each of the following examples. Find brokers' invoices and canceled checks showing agreement (1) with record amounts for securities investments. (2) Observe test counting of client's physical inventory taking. Select a sample of shipping documents and trace them to sales invoices, sales journal recording, and posting to general ledger. (4) Ask client personnel about accounting events. (5) Study financial information in relation to nonfinancial information. (6) Scan expense accounts for credit entries. (7) Compare financial information with that of prior periods. (8) Obtain written client representation letter. (9) Scan payroll check lists for unusually large checks. |(10) Complete an internal control questionnaire. (11) Obtain client's lawyer's letter. (3) Study predictable financial information patterns (e.g., ratio (12) analysis). (13) Analyze valuation of receivables by re-aging them by due date. (14) Obtain accounts receivable confirmations. (15) Compare financial information with budgets and forecasts. (16) Verify existence of fixed assets by locating them. (17) Compare financial information to industry statistics. (18) Recompute the client's calculation of depreciation expense.
Expert Answer:
Answer rating: 100% (QA)
1 DOCUMENT INSPECTION VOUCHING 2OBSERVATION 3DOCUMENT INSPECTION TRACING 4INQUIRY AND WRITTEN REPRE... View the full answer
Related Book For
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws
Posted Date:
Students also viewed these accounting questions
-
Auditors frequently refer to the terms standards and procedures. Standards deal with measures of the quality of performance. Standards specifically refer to the generally accepted auditing standards...
-
Use the following information for questions 6-7. Accounts receivable.....$ 2,500 Cost of goods sold........ 200,000 Profit............. 50,000 Net sales. Sales....... 450,000 500,000 Total assets....
-
The type of sampling most frequently used by auditors during their study of internal control is referred to as a. Attributes sampling. b. Control sampling. c. Monetary unit sampling. d. Variables...
-
A factory with three departments uses a single production overhead absorption rate expressed as a percentage of direct wages cost. It has been suggested that departmental overhead absorption rates...
-
Arthur Corporation has the following selected financial data: There were no preferred dividends in arrears. (a). Calculate the following ratios for 2012: (1) Rate of return on common shareholders...
-
Explain why merchants accepted gold receipts as a means of payment even though the receipts were issued by gold-smiths, not the government. What risk did goldsmiths introduce into the payments system...
-
Which is (are) the most appropriate financial product(s) for the following companies: a company that wants to raise fresh equity capital immediately but does not want to risk losing control; a...
-
Jennifer Ross, an employee of Hampton Company, worked 44 hours during the week of February 9 through 15. Her rate of pay is $ 30 per hour, and she receives time- and- a- half for work in excess of 40...
-
Add these Binary numbers: 1011 + 100 = O 1100 O 0111 O 1111 O 10011
-
A counter-current gas-absorption column is to be designed to remove CO 2 from an inert gas stream by reaction with an amine solution at 20C. At this temperature, CO 2 reacts with the amine according...
-
6. In a simple orthorhombic system two lattice points are connected through the translation vector T=2a+3b+4c, where a=2, b=3 and c=4. Determine the direction of the translation vector. [3] 7. The...
-
Which two ledger accounts would you use in recording each of the following transactions? (a) cash sales (b) rent paid by cheque (c) wages paid in cash (d) a supplier of goods paid by cheque (e) goods...
-
Auditors try to identify predictable relationships when using analytical procedures. Relationships involving transactions from which of the following accounts most likely would yield the highest...
-
University lecturers are expected to do some research but it is not always easy for accounting lecturers to find a topic that is publishable at least in the academic journals and thereby lead to...
-
Legal expense is understated because legal fees related to an unexpected lawsuit brought by a minoritv stockholder have not been billed br the law firm or accrued bv the client. Which of the...
-
List as many items as you can think of that are normally included in a profit and loss account that have neither been debited nor credited to the cash/bank account. Prepare a similar list for all the...
-
Given below is an excerpt from a management performance report: Budget Actual Difference Contribution margin $1200000 $1251000 $51000 Controllable fixed costs $451000 $400000 $51000 The manager's...
-
Why is the national security argument for tariffs questionable?
-
The primary purpose for obtaining an understanding of the entitys environment (including its internal control) in a financial statement audit is a. To determine the nature, timing, and extent of...
-
Which of the following would not overstate current- period net income? a. Capitalizing an expenditure that should be expensed. b. Failing to record a liability as an expense. c. Failing to record a...
-
Madison Perry, CPA, is conducting an audit of Parker Inc. In so doing, Perry is performing a study of Parkers internal control and has identified a number of important controls related to purchases...
-
Explain the criteria that a deferred tax provision needs to satisfy under IAS 12 in order to be accepted as a liability in the balance sheet.
-
A fixed asset (a machine) was purchased by Adjourn plc on 1 July 20X1 at a cost of 25,000. The company prepares its annual accounts to 31 March in each year.The policy of the company is to depreciate...
-
The Mission Company Ltd, whose year-end is 31 December, has acquired two items of machinery on leases, the conditions of which are as follows: Item Y: Ten annual instalments of 20,000 each, the first...
Study smarter with the SolutionInn App